"isolate" and clean (remove grass, using clone tool) head's mushroom, put it on a new bckgrnd
step 2 of 5
make a selection (ctrl+ clic on the mushroom layer) on the bckgrnd layer,copy and paste then adjust the level to make it brighter and have more contrast. Put a little gaussian blur
step 3 of 5
I draw using path tool, make a selection, adjust level, and blur
step 4 of 5
with the same selection on a new layer a fill it with black, and bring the fill opacity to 0% via the layer style menu, this way you only see the inner shadow and inner glow
step 5 of 5
select the highlights with select range (holding shift key to select multiple range)